Leverage trading can amplify profits but also amplify losses, so proper leverage management is a key aspect of risk control.
Principles for Choosing Leverage
Select leverage based on your own risk tolerance.
Beginners or investors with low risk tolerance are advised to use low leverage (e.g., 2x~5x) to avoid forced liquidation due to price fluctuations.
Experienced traders can choose medium to high leverage based on strategy and market conditions, but must implement strict risk control.
Leverage and Position Size
Higher leverage requires less margin but increases potential loss risk.
It is recommended not to invest all funds in high-leverage positions; consider building positions in batches to reduce risk.
Practical Recommendations
Always monitor the margin ratio to ensure sufficient account margin and avoid forced liquidation.
Combine with stop loss and take profit settings to control losses and lock in profits.
Regularly review and adjust leverage according to market volatility to manage positions flexibly.
Summary
Proper leverage management allows investors to take advantage of leverage while reducing potential losses. Leverage management is a critical part of contract trading risk control. Combined with position management, stop loss/take profit, and fund planning, it enables investors to participate in the market more safely and steadily.